Over the last few weeks, cryptocurrencies, like Ripple (XRP) rallied to historic highs. However, don’t be so quick to invest. At least, not until the smoke clears. After slipping from about 63 cents to a recent low of 26 cents, XRP could see lower lows.
If you really want to buy, wait for the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple to blow over.
Cryptocurrency exchanges have been parting ways with XRP after the SEC filed a lawsuit against the coin’s issuer, Ripple Labs. Coinbase even suspended trading on XRP last week. Kraken also froze XRP trading in the U.S. following the suit, as well.
In addition, XPR investors were advised to settle their positions in the coin to avoid any disruption by 5 p.m. PST Friday, Jan. 29. In addition, we have to consider that institutions aren’t likely to touch the coin until the legal issues have been resolved.
All thanks to an SEC lawsuit that alleges XRP has always been a security rather than a currancy, and that it should have been registered with the commission.
Ripple CEO Brad Garlinghouse Objects
“To be clear, this is all based on their illogical claim that XRP is, in their view, somehow the functional equivalent of a share of stock,” said Ripple CEO Brad Garlinghouse. “What’s more, for them to say that XRP has been a security all along and that Ripple, Chris and I should have known makes absolutely no sense… particularly when the U.S. Treasury and U.S. Department of Justice have long ago concluded that XRP is a currency.”
With all of the chaos facing XRP right now, I’d avoid it.
Let it come down a bit more on fear.
Wait for it to settle, and then consider buying. If Garlinghouse is correct that the SEC is wrong in this matter, XRP could potentially rally back once the dust has settled. At the moment, it’s all a wait-and-see. While we wait it makes sense to take a look at alternatives to Ripple. If you took your money out and are looking for other cryptos, there’s a great chance that you’ll find another one.
After all, cryptocurrencies have been hot and look as if they’re going to stay that way for a while.
A Closer Look at Ripple Alternatives
Cryptocurrencies had an incredible start to the year.
- Bitcoin (CCC:BTC) raced to a high of $40,783
- Ethereum (CCC:ETH) hit a high of $1,339
- Polkadot (CCC:DOT) rallied to $10.31
- Litecoin (CCC:LTC) was up to $183.19
- Bitcoin Cash (CCC:BCH) rallied to just under $610
- Tether (CCC:USDT) ran to a high of $1.01
Even though they came under pressure thanks to U.S. Treasury Secretary Janet Yellen, it looks as if they’re making headway again.
Yellen warned cryptocurrencies are being used “mainly for illicit financing,” as quoted by CNBC, but also testified that there is a place in the economy for cryptocurrencies, but hoped to make them less attractive for use in illegal activities. It signaled that the Biden Administration wouldn’t be as hard on cryptocurrencies as many had feared.
Institutions Wake up to Opportunity
According to Skyridge Capital, we could see a “tidal wave of institutional capital.” In fact, the firm says the cryptocurrency could see maturation as an asset class, and attract hedge funds, public company treasurers, insurance companies, pension funds, RIAs, banks, brokerage houses, and even a potential Bitcoin ETF.
Citibank says we could see $318,000 BTC in 2021. Goldman Sachs, JP Morgan, and Citi are all reportedly looking into crypto custody, as noted by CoinDesk. Even BlackRock just said two of its funds can now invest in cryptocurrencies.
At the moment, the BlackRock Strategic Income Opportunities Fund and the BlackRock Global Allocation fund are only allowed to trade cash-settled bitcoin futures. BlackRock also said demand for Bitcoin is going to be a part of the asset suite for investors for a long time.
With that kind of interest, most cryptocurrencies could gain even more traction. That is, with the exception of Ripple until the SEC settles its suit.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.